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Ask HN: Should I buy Facebook stock while the price is low?
I always hear anecdotal stories of people whose uncles bought them a chunk of Apple stock when it was in the double-figure value (and are now loaded, or at least fully-funded through college or starting a business, etc.)
With this in mind - should I buy a small-ish amount of FB stock, as a long-term investment, given how low the price is falling?
- ezl 14y agoIs the price low?
- greg7mdp 14y agoPeople remember and talk about the great stock purchase they made, while the painful memories of terrible investments are repressed and seldom mentioned. They is no guarantee that Facebook stock will significantly appreciate... indeed many believe that it is overvalued and will keep go down, which is why they are selling the stock these days and the price is going down. If you want to gamble with your money, go ahead and purchase a speculative stock like FB, you are taking a big risk for a potential big reward. I personally think it would be wiser (but surely less exciting) to purchase low cost index funds with your money.
- josscrowcroft 14y agoSolid advice, thanks!
- b0o 14y ago"should I buy a small-ish amount of FB stock, as a long-term investment, given how low the price is falling" No. FB stock is dropping, and it'll still continue to drop, and will continue to drop as long as facebook continues to not make any moves to give investors reasons to buy. FB stock hasn't hit rock bottom yet, but when it does, it won't be a good long-term investment. What you're thinking of doing isn't investing, it's called gambling.
- pmorici 14y agoThe p/e ratio is still in the 90's if they don't show generous increases in their profit or revenue then the price has a lot further to fall.
- stewie2 14y agoIn long-term, facebook will be the next AOL. Think about it.
- solipsist 14y agoAs most of the HN crowd is skeptical of Facebook's future stock performance, I'd like to offer another perspective. 1980: Underwriters Morgan Stanley and Hambrecht & Quist take Apple Computer public in the largest IPO since Ford Motor Company went public in 1956. Originally filed to sell at US$14 a share, the stock opens at $22 and all 4.6 million shares sell out in minutes. The stock rises almost 32 percent on its first day of trading to close at US$29, giving the company a market valuation of US$1.778 billion. For fiscal year 1980, Apple showed a profit of US$11.7 million, or 24 cents a share on revenue of US$118 million (compared to US$8.3 billion in fiscal 2004), giving the IPO a P/E ratio of 92. Of Apple's 1,000 employees, more than 40 become instant millionaires thanks to their stock options. [1] Facebook's P/E ratio today (5/29/12): 92.31 Apple's P/E ratio in 1980: 92 Fun fact: Apple's stock was down 20.44% a year after they went public. [1] - http://www.macobserver.com/columns/thisweek/2004/20041218.shtml http://www.macobserver.com/columns/thisweek/2004/20041218.sh...
- josscrowcroft 14y agoThat is interesting. Thanks!
- solipsist 14y agoGlad I could help. Just remember that numbers aren't everything. I personally would not buy Facebook at this time due to other reasons...
- smartwater 14y agoAnd those reasons are?
- solipsist 14y agoCan't really pinpoint it to one thing. What I was trying to get across was the fact that numbers (P/E ratios, etc.) should only be a factor in one's purchases. I think that when you look at Facebook, the market it is in, and its revenue model, and then compare it to Apple back in 1980, there are some stark contrasts you'll find. Sure, there's hindsight bias and all, but I personally feel that Facebook has entered a market where making money is a lot harder that it was for Apple. In order for Facebook to grow a few order of magnitudes, I feel that there would need to be a radical shift in the way we Internet users feel about spending money online or else the way advertisers reach potential customers. But I just looked at your profile... and wow! That's one impressive resume! I'd be a lot more interested in hearing your perspective on Facebook and its financial strength, etc. This is one of those moments where I'd really wish HN had a PM system.
- adrianwaj 14y agoWell, they've got everyone hooked now on their network so they just need to start charging for each time you do something on it. The bigger the addict, the more they can charge.
- onlyup 14y agoWhat? Facebook is never going to work that way.
- adrianwaj 14y agoYou'd be surprised. But if you say so.
- onlyup 14y agoDo you have any examples of massive businesses similar to Facebook changing their model to something like you suggest?
- adrianwaj 14y agoGoogle maps now charge, don't they? Or is it just to volume users? I mean if FB has a monopoly, they can do anything they want. They can limit their free service to 45 mins per month or <250 friends. I personally think if they are passing off information to government, then gov will bankroll them to some extent for favors. Collusion? That's just a loaded word, it's all business in the end. add: more likely they'll just package up some enterprise plan for Fortune 100/500 companies with special analytics, features, etc by building around a set of their most requested features from such companies.
- stewie2 14y agoIn that case, there will be another free social network.
- NonEUCitizen 14y agoIts price is not low.